China in transition: Marketers swing towards mobile

As the ‘great migration’ from traditional PC usage to mobile devices intensifies in China, marketers have every incentive to tap into an extensive rural and urban customer base. 

Recent research by GroupM Interaction and Decision-Fuel found that mobile internet usage in the mainland has hit a tipping point. The smartphone, which marketers used to call the ‘third screen’, is fast emerging as ‘the first screen’. Mobiles are now influencing nearly every aspect of everyday life, with 95 per cent spending what GroupM terms as the day’s 25th hour on their phones before sleeping.

Important mobile milestones in China include the smartphone overtaking the desktop PC to become the most popular internet access device in 2012, according to the China Internet Network Information Centre, and China surpassing the United States to become the world’s largest smartphone market by daily activations. In addition, China’s average monthly mobile data usage per user reached 122.8 MB in the first half of 2013, up 36.6 per cent year-on-year, according to the Ministry of Industry and Information Technology. The user base for mobile music and video, mobile gaming and mobile literature hiked 14 per cent, 19 per cent and 29 per cent from the end of 2012 respectively.

Driven by a large number of local smartphone users (500 million devices are expected to be in use by the end of 2013), Experian’s latest survey of 321 Chinese marketers indicates that 36 per cent have tested mobile marketing to reach their target audiences, yet only 16 per cent have incorporated mobile as part of their mainline marketing communications.

Mobile is a medium unlike any other that marketers have used in the past. It involves a fair amount of technology, so the barrier to entry is actually an educational one, says Rohit Dadwal, managing director of the Asia-Pacific branch of the Mobile Marketing Association (MMA). Learning how to effectively use mobile to cater to marketing objectives is the key.

“Everybody knows they need to get into mobile, but the problem is how,” says Tony Chen, president of GroupM Interaction and co-chair of MMA China. “The reality check is that mobile usage is very fragmented. Attention is not captive.” 

For instance, daily mobile video viewership is on average 74 minutes spent on 13 videos, compared with 52 minutes on five videos on a PC or laptop, according to Dele Liu, president of Youku Tudou.

Paul Berney, managing director of MMA’s EMEA branch, said a lot of marketers have been trained to understand that advertising is about reach and frequency. “But that is not how mobile marketing works,” he says, noting that careful targeting is much more important.

During a joint forum on 11 July that Campaign Asia-Pacific attended, more than 50 MMA China members, including advertisers, agencies, media owners and third-party monitoring firms, reached a consensus on the adoption of mobile measurement standards, including the methodology of APIs (application programming interfaces), SDKs (software development kits), HTML tags, asynchronous transmissions and pixel tracking.

With SDKs embedded in mobile apps for instance, data collected can tell how often users open an app, how much time they spend on average, and how active they are. Mobiles present marketers with a treasure trove of big data to decode the buying behaviour of consumers, on the condition that agencies help to analyse and translate the data into intelligence that they can act on “rather than just pure volume or quantum”, says Berney.

While most brands are still in trial mode, some have rolled out cutting-edge mobile campaigns. E-tail giant Taobao, for example, ran a ‘Shopfest’ online to celebrate China’s ‘Double Eleven Day’ (11 November, 2012), an online shopping festival similar to the Cyber Monday shopping spree in the US. A significant portion of merchants used relatively rudimentary short message services (SMS) to offer discounts at their virtual stores. The full campaign resulted in an impressive US$3.1 billion in sales.

Other mobile marketing tactics expected to show big gains include ‘freemium’ mobile applications, mobile-optimised emails, QR codes and barcodes.

TNS’s annual study, based on responses from 3,000 consumers across tier-one to tier-five cities in China, showed China’s youth to be quite open to engage with brands via mobile. Fifty-one per cent of 16-30 year-olds say they would be interested in receiving special deals by interacting with an ad, or getting more information about a product in-store by scanning a code with their smartphones.

“The true beauty of mobile marketing is in gamification and socialisation,” says Ben Wilson, marketing director at Reckitt Benckiser China, who emphasises that the company uses mobile apps like its Durex Baby for longer-term branding instead of expecting immediate sales from it.

Technology-led brands like Intel, Samsung and China Unicom are also starting mobile advertising on a bigger scale. “It helps that we have a ‘freedom-to-fail’ brand culture,” reveals David Sun, marketing services director of Intel China.

Another behemoth lies beneath the surface. WeChat’s version 5.0 hit the streets with its new mobile-payment function that is expected to subvert the existing e-commerce model. Upon synching bank cards and creating a WeChat payment password, users can make in-app purchases without the use of a third-party payment processor such as Alipay or Tenpay.

The latest numbers from iResearch indicate the total gross merchandise value (GMV) generated on mobile phones in China hit 37.5 billion yuan in the second quarter, up 181 per cent year-on-year with the lion’s share on Alibaba’s Taobao and Tmall platforms. Still, mobile shopping is still just a fraction (8.6 per cent) of the overall e-commerce market.

A number of obstacles still stand in the way of mass uptake: a lack of technological understanding and multichannel strategies, absence of in-house resources, slow download speeds and poor senior corporate support. As numbers proving the worth of mobile marketing emerge, these can be expected to disappear, says Michael Tang, president of hdtMedia. Tang also points to the issuing of fourth-generation (4G) network licences as a catalyst for effective mobile marketing.

Some 92 per cent of marketers also agree that mobile will soon be one of the most popular ways for consumers in China to engage with brands, according to Experian, instead of remaining at the ad hoc, campaign-by-campaign stage.

Chen says mobile marketing is about being the bridge of other media channels, as well as the enabler and activator for better campaigns, and so deserves a long-term strategy much like an annual TVC scheduling plan.

“Brands don’t need a mobile strategy, their strategies need mobile,” concludes Dadwal. “Mobile should enhance and amplify whatever is already done, instead of being an afterthought.”

EXPERT COMMENT Western thinking can be counterproductive

Joe Webb, Greater China digital head, TNS

Consumers in China are far more mobile-centric than their Western counterparts, yet many marketers are still reliant on techniques based on Western thinking.

There is a real need to catch up, and to develop mobile-centric marketing strategies that are in sync with the very different market infrastructure and even long commuting traffic environment of China.

Driven by a combination of local handset brands such as Huawei and Lenovo producing many affordable models and the long-tail effect of the open-source Android OS, smartphone ownership has seen exponential growth at 64 per cent in China, and is going to get even higher.

The under-30s are by far the most mobile, with smartphones taking up the largest share of time (more than one-third) in their pre-purchase paths. When they compare prices or check buzz about products, their purchase journeys become more transparent and social. This creates an opportunity to build brands by meeting contextual consumer needs on- and offline.

Marketers like Nike and the Henderson Metropolitan shopping centre in Shanghai are doing just that.

Henderson’s shopper app lets users find their way around the mall with a simple map function and log in to get location-based offers and coupons. Nike’s utility app lets runners plot their route and track their progress, motivates them with music tracks from a playlist, and uploads their running times to the Nike+ community to share with friends and peers.

These mobile deployments provide useful information, which do not necessarily directly activate sales, but helps consumers view these brands in a more favourable light —which will bring them a step closer to the final point of purchase.

CASE STUDY How virtual babies can sell condoms

Condom manufacturer Durex’s iPhone app simulates what it’s like to care for a newborn child. When downloaded, a user can ‘impregnate’ another by rubbing smartphones together, causing a baby to be ‘born’. Not only will the user have to bathe, feed and sing to the virtual baby, his Facebook friends will also know he has become a ‘father’. Fortunately, purchasing a packet of Durex and taking a photo of the digitised barcode undoes the application. This not only serves as a measure to raise awareness of the responsibilities involved in babycare, but also sells condoms: one download of the app would presumably result in at least one sale.